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Kasich scales back prison privatization plan

The state had planned to sell 5 prisons to help balance the budget.

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By Laura A. Bischoff, Columbus Bureau 11:02 PM Thursday, September 1, 2011

COLUMBUS — The Kasich administration scaled back its prison privatization plans on Thursday and decided to sell just one facility and hire the new owner plus another vendor to operate a total of three prisons. The deals are expected to impact nearly 1,200 workers and 6,100 inmates across the state.

Originally, Kasich planned on selling five prisons to private vendors. But in the end, state officials decided the taxpayers would get a better deal to go this route: sell the Lake Erie Correctional Institution in Conneaut for $72.7 million to Corrections Corporation of America, which will be paid to house state inmates there; hire Management & Training Corp to operate the North Central Correctional Institution and operate the now-closed Marion Juvenile Facility as an adult prison camp.

State officials from the departments of budget, prisons and administrative services decided to merge Grafton Correctional Institution and North Coast Correctional Treatment Facility in Grafton and run it with state workers.

Ohio will become the first state in the nation to sell a state-built prison to a private vendor, said Department of Rehabilitation and Correction Director Gary Mohr.

The state opened the $41 million Lake Erie facility in 2000 but hired outside vendors to run it.

Mohr said the changes will save taxpayer money, improve safety for the state’s 50,000 inmates and 10,000 prison workers and keep jobs in Ohio and prisons open.

The Ohio Civil Service Employees Association, the union representing prison workers, breathed a sigh of relief.

“I was taken aback. I was surprised and very happy,” said OCSEA President Christopher Mabe. He added that the union believes incarcerating human beings should be left to the state, which does not profit from it.

Exactly how many state workers will lose their jobs is unclear since there are vacancies to be filled throughout the system so employees may transfer to openings. Also, the contracts with CCA and M&TC require preferential hiring for state prison workers.

Mabe noted that privately operated prisons offer lower pay and fewer benefits than government run ones. “That’s how they make their money. They save money off the backs of people,” Mabe said.

The state will hand over keys at 10 p.m. on Dec. 31.

The deals are projected to last 20 years, but the contracts will be renegotiated every two years and be subject to approval by the General Assembly. The contracts contain a provision that cost increases cannot exceed inflation, said Department of Rehabilitation and Correction Chief of Staff Linda Janes, who handled the deal after Mohr recused himself to avoid any appearances of conflict of interest.

Mohr, who recently worked for CCA, said he was briefed on the agreements for the first time on Wednesday.

The state will pay CCA an annual $3.8 million “ownership fee” that will allow DRC to switch to a new operator if CCA does not perform satisfactorily.

The new deals appear to shift more costs to the private vendor. For example, current contracts with M&TC include a cap on per inmate health care costs the company must pay. There will be no caps in the new agreements: all health care expenses will have to be covered by the inmate per diem the state will pay.

Also, the two privately operated Ohio prisons are just at capacity while state-run facilities are crammed with 30 percent more prisoners than they were designed to hold. The new agreements require the vendors to add a total of 702 beds. It may ease overcrowding at state facilities but it means the privately-operated ones will be over capacity too.

Union officials and other opponents of private prisons have complained that private vendors are sent the healthiest and best behaved inmates. DRC officials dispute that claim and reiterated on Thursday that the state will assign inmates that are appropriate for each facility.

State law requires privately run prisons to yield at least 5 percent annual savings over what it would cost the state to operate them. The new agreements are projected to bring 8 percent annual savings at Lake Erie and 6 percent savings at Marion, DRC said.

Policy Matters Ohio, however, disputed how DRC calculates projected savings. “The state’s method for calculating the hefty savings it has claimed for private prisons does not stand up well to scrutiny. It has shifted substantially and in some cases mysteriously and inexplicably, from biennium to biennium,” the left-leaning think tank reported in April.

ProgressOhio, another liberal think tank, filed a lawsuit in Franklin County Common Pleas Court seeking to block the prison sale. The judge in that case declined to grant a temporary restraining order to halt the sale.

“After reviewing the facts around this sale, the fundamentals of the case remain the same. While the state seems to have changed their original proposal, the constitutional issues still exist and we will continue to seek a resolution to those through the judicial process,” said Brian Rothenberg of ProgressOhio.

DRC spokesman Carlo LoParo declined to comment on the lawsuit.

Gov. John Kasich’s press secretary, Rob Nichols, praised the new agreements.

“It bring cost savings. It is a huge cash windfall. It makes the prisons safer and it brings cost certainty in our capital costs. And it brings private sector innovations to our prison system,” Nichols said.

Contact this reporter at (614) 224-1624 or lbischoff@DaytonDailyNews.com.

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